Ernie likes energy bars and smoothies. The table below shows his utility from energy bars and smoothies.Quantity of smoothiesUtility from smoothiesQuantity of energy barsUtility from energy bars00001322282604523846724104888512010100The price of an energy bar is $2, the price of a smoothie is $4, and Ernie has $20 to spend.Which consumption bundles of energy bars and soothies can Ernie consume if he spends all his money? Illustrate his budget line with a diagram, putting smoothies on the horizontal axis and energy bars on the vertical axis.Calculate the marginal utility of each energy bar and the marginal utility of each smoothie. Then calculate the marginal utility per dollar spend on energy bars and the marginal utility per dollar spent on smoothies.What is Ernie’s utility maximizing bundle of energy bars and smoothies?

The graph attached below shows the budget line for Ernie. The budget line shows all the possible…

Answered: Which consumption bundles of energy…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Ernie likes energy bars and smoothies. The table below shows his utility from energy bars and smoothies.

Quantity of smoothies	Utility from smoothies	Quantity of energy bars	Utility from energy bars
0	0	0	0
1	32	2	28
2	60	4	52
3	84	6	72
4	104	8	88
5	120	10	100

The price of an energy bar is $2, the price of a smoothie is $4, and Ernie has $20 to spend.

Which consumption bundles of energy bars and soothies can Ernie consume if he spends all his money? Illustrate his budget line with a diagram, putting smoothies on the horizontal axis and energy bars on the vertical axis.
Calculate the marginal utility of each energy bar and the marginal utility of each smoothie. Then calculate the marginal utility per dollar spend on energy bars and the marginal utility per dollar spent on smoothies.
What is Ernie’s utility maximizing bundle of energy bars and smoothies?

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